Credit Scores - Know More About the Money You Borrow

Updated on September 7, 2012

Compare Bank and Other Loans and Your Credit

Getting the best rate on mortgages and home loans when you compare bank loans, partially depends on you putting yourself in the best financial situation possible. You will have more choices and more control if you have saved a significant amount towards a down payment on the property, and if your credit score is top rated.

Saving for mortgages and home loans starts with having an idea of how much you will need, and then looking to compare bank loans so that you know if what you have saved is enough to make the home affordable. It is common practice to put down approximately 20% towards the mortgage. Looking at what price ranges, the homes you are looking at, this will give you a target to aim for and an idea of the amount of money you need. Now that you have a target you can set up a savings strategy. In addition to needing money for the down payment, you should allow for other cost factors to cover the deposit on the home, closing costs and moving costs. Closing costs run approximately 3-4% of what the cost of the property is.

Saving for a Home

To begin saving towards your home, look over where you can cut things you spend on, you may not even miss. Try to see if there are ways to spend less on eating out. Take your lunch to work, eat dinner out less, and try to cut out that morning cup of coffee you buy. Add these costs up and you will be surprised at how much money it will save you over the course of the year. Cut back where you can and live within your means so that you are not borrowing against your future. Sometimes little things like going over your cell phone bills to see where you may be spending money on unnecessary items. These savings will just be money in your pocket, and it may be worth giving up a little convenience to be able to save more towards your mortgage. Again, if you compare secured bank loan rates, and need to borrow less money, your accumulated savings on interest from the loan over the years will be significant.

Saving for a home is a very satisfying accomplishment. No one can give you exact instructions of what to do, because what is good for one person, may not be good for another. There are things that you just won’t give up to do, while someone else can easily give it up. Saving towards a home is an individual experience. For example, you and your best friend might go out monthly for dinner. Some people might choose to give this up. Your dinner with your friend might mean something deeper to you, and so instead of giving it up, you might choose to go out to a less expensive place to eat. Some people may not want to change anything about the dinner with their friend, because they have given up something else. It does matter to try to cut where ever you can and as much as you can. You will be happy you did once you see the difference as you compare secured loan rates and how much you need to borrow.

Know Your Credit Score

Shopping around to compare secured loans will give you an idea of the various mortgage rates you can choose from. The more money you have saved, the more you will be able to negotiate because you will be a more desirable customer to the lender. As you compare secured loans, your choice could save you thousands of dollars. The best thing you can do is first, know your credit score, by getting a copy your credit history. The credit report lists vital information about your financial history and also includes your address, how long you have resided there, the payment history of your bills, and any legal actions that have been taken against you. These include, lawsuits, arrest records, and bankruptcy filings. There are 3 Credit bureaus that keep track of this information and sell the reports to any company that is looking into your credit. In addition, employers and insurance agencies, and those looking to rent a home, will use this data as a measurement of your financial risk. You can get a free copy of your credit report from each of the 3 credit bureaus (Experian, Trans Union and Equifax) once a year at annualcreditreport.com. When you compare secured loans, you will be able to factor in your credit score and how it will affect your mortgage rate.

Lenders also like to see stable and long term employment history from the borrowers. If you changed jobs recently, but are still in the same industry, you write a letter substantiating this. If you have had problems paying your bills, because, as an example, you had high medical bills, or were laid off, you can write a letter explainjng the reasons for the credit snafu. The lender must consider this information if you supply it.

Research Lenders to Compare Secured Loans

It is a good idea to research many different lenders to compare secured loans and gather the total cost of the loan to you, which includes fees and interest rate. Be aware that there could be a difference in origination fees and points on the loan which could add up to be a major difference in the cost of the loan to you. The lender bases their quotes off of a rate sheet. You can ask to see the rate sheet. Should you be refused, your suscpicion should be aroused and you may not be offered the lowest available rates You can shop around to gain more knowledge or try to bargain for a better rate. You are allowed to ask and negotiate with the financial lenders. Origination fees, points and application fees are especially negotiable. Compare secured loans, save as much money as you can prior to seeking a mortgage, guard your credit rating and keep a check on your credit score. These are the important things to do as you compare secured loans.

Give Yourself the Most Advantages

Now that you saved for your home, you need to compare secured loans. You will want to get information from many banks and lending institutions so that you can compare the secured loan rates and the other costs entailed in obtaining the mortgage. You can try to negotiate with the lender to save more money where you can. Purchasing a home is the biggest expense you will probably take on in your lifetime. It is a serious obligation and one that will yield you benefits when you have given yourself the best advantages. So save as much as you can, for as long as you can. Compare secured loan rates and other fees, make sure your credit rating is in good shape and look for a home that suits your needs now and in the future. Best of luck, and enjoy your home sweet home.

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